Gold prices eased in Asia on Tuesday after a firming dollar reduced the yellow metal's safe-haven appeal, but gains in Tokyo futures provided support and helped it hold at around $412 an ounce. Spot gold was at $412.35/412.85 an ounce by 0413 GMT, versus $413.80/414.60 an ounce in New York. The metal had fallen to $412.25 an ounce in Asia, matching a near 4-month low reached on Monday.
A stronger dollar and the prospect of the International Monetary Fund selling gold from its reserves for Third World debt relief put pressure on gold, which is expected to trade this week in a range of $412 -- the 200-day moving average -- to $418.
Trading has slowed in Asia ahead of the long Lunar New Year holiday which begins on Wednesday, but dealers said the currency market would continue to provide leads.
In Tokyo, the benchmark December gold futures contract gained 3 yen per gram to 1,396 yen as a weaker Japanese currency spurred buying by trading firms.
Dealers said falling prices have triggered fresh buying interest from big investors and jewellers in main consumer countries such as India and China and would prevent gold from breaching key support of around $410 an ounce.
"We're expecting stronger demand from India after the holiday," said Ellison Chu, senior manager at Standard Bank London in Hong Kong, a key bullion trading centre in East Asia.
"Nobody is trading physical now. Nobody is going to ship anything out because of the long holiday," he added.
Gold has lost around 9 percent in value since hitting a 16-1/2-year-high of $456.75 an ounce in December, mainly due to a dollar upturn that makes dollar-priced gold less appealing for holders of other currencies.
The dollar held near a three-month high against the euro and a one-month high against the yen on optimism that the worst of the US twin deficits, which have been a key driver of dollar weakness, may have passed -- at least for now.
Federal Reserve Chairman Alan Greenspan surprised some in the market last Friday when he said market forces and a more austere US fiscal policy should stabilise and may cut the current account deficit.
The dollar stood at 104.93 yen, near a one-month high of 105.06 yen hit on Monday and compared with 104.84 in late US trade.
The euro traded around $1.2764, after falling to a three-month low of $1.2732 on Monday. It fetched 1.2757 in late New York trade.
"Nothing is positive for gold at the moment. We will watch the currency market as we have been in the last few months," said one dealer in Sydney.
Platinum dropped to $857/862 an ounce from $866.50/871.50 last traded in New York. Sister metal palladium was at $178/183 an ounce, versus $176.50/181.50.
Silver was at $6.50/6.52 an ounce, against $6.52/6.55.
Comments
Comments are closed.